Realtors® Offer Transparency and Choice

According to recent Eagle County market data, the number of new homes for sale and the number of closed sales have both slightly increased. This is welcome news for home buyers and sellers as the housing market gains its footing.

Homebuyers and sellers should also know that even bigger changes have gone into effect locally and nationwide. These changes will empower consumers as they work with real estate professionals to navigate one of the most significant and complex transactions of their lives.
These changes in the real estate practice add transparency and choice to the process where home buyers and sellers compensate agents for their hard work and expertise.

First, here is a little background on the changes. They resulted from the National Association of REALTORS®' (NAR) proposed settlement agreement to end litigation of claims brought on behalf of home sellers related to broker commissions. The litigation claimed that NAR and its members set commission amounts, breaking antitrust laws.

However, NAR and the Vail Board of REALTORS® (VBR), the local association representing Realtors® in Eagle County, have never encouraged or required a set amount. There has never been a standard commission amount pre-set or suggested by Realtors®.

NAR continues to deny any wrongdoing and entered into the settlement with two non-negotiable goals: to resolve claims for as many members as possible and preserve the choices consumers have regarding real estate services and compensation.

So, you’re probably wondering, what are the changes and what might they mean for me as a home buyer or seller?

First, agents and brokers working with a homebuyer must now have a written agreement in place before touring a home. These agreements are important because they encourage transparency — they facilitate an open conversation about what agents will do on a buyer’s behalf and how they will be compensated for the value they bring to a transaction.

If you bought a home in the past, you probably didn’t pay out of pocket for your agent’s services. The seller’s agent likely shared their commission with the buyer’s agent to compensate them for the value they brought to the transaction. In the real estate industry, these are known as “offers of compensation.” NAR and VBR both believe these remain an important option for agents, buyers and sellers.

At their core, these offers of compensation provide access. Some buyers, especially first-time or lower-income buyers, may not have the upfront cash to compensate a real estate professional — one who can represent them during a home purchase and provide crucial guidance during a complex process that can be overwhelming without the necessary expertise.

Offers of compensation have clear benefits for sellers as well. By expanding access to a greater number of prospective buyers, they drive competition and help sellers get the best offer for their property.

Compensation for buyer and seller agents has always been negotiable, and that is not changing. The new practice changes make this clear and increase the choices available to both sides.

For example, if sellers want to offer compensation to their agent, the sellers can do so. If buyers want to request compensation for their agents from a seller, that can be part of the negotiation as well. And these are just two possible scenarios. Simply put, consumers have many choices available to find an option that works for both them and their agent.

The second practice change relates to how offers of compensation can be communicated. Specifically, a seller’s agent cannot offer compensation to a buyer’s agent on Multiple Listing Services (MLS), which are local marketplaces used by brokers to share information about properties for sale. However, consumers and real estate professionals can still advertise, discuss and negotiate offers of compensation elsewhere.

Despite these big changes, one thing hasn’t changed — the Realtor® Code of Ethics. Agents who are Realtors® are required to act in the best interest of clients. The code of ethics remains as important and powerful as ever. It signifies a solemn commitment to care and do right by those they represent. In the context of the proposed settlement, it means abiding by it in letter and spirit.

Because of these changes, consumers will benefit from enhanced transparency and choice. They will have more insight into the services they’ll receive from agents and how much those services will cost.

For those looking to realize the dream of homeownership Realtors® continue to be at their side to help them navigate the process.

To find a Realtor® who can help you navigate the local real estate market, visit vbr.net/why-use-a-realtor.